Category Archives for Costing Methods

The Traditional (Absorption Costing) Income Statement

The traditional income statement uses absorption costing to create the income statement. This income statement looks at costs by dividing costs into product and period costs. In order to complete this

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The Contribution Margin Income Statement

The contribution margin income statement is a very useful tool in planning and decision making. While it cannot be used for GAAP financial statements, it is often used by managers internally. The contribution

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Absorption and Variable Product Costing

There are two major costing methods used for creating income statements in managerial accounting: absorption costing and variable costing. These two methods vary based on the way that fixed overhead is

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